Subscribe to Entrepreneur for $5

Cheap SUV, Questionable Deal?

Just because SUV dealers are offering deals that sound great, it doesn't mean they are great. Learn how to read between the lines.

Opinions expressed by Entrepreneur contributors are their own.

Provided by

So SUVs, finally, are losing their luster. While auto sales overall fell 7.5 percent in September, sales of SUVs and other light trucks plunged by nearly 20 percent, as consumers decided that at 50 bucks per fill-up, they shouldn't have to fill up quite so often. Instead, Americans are buying more modest wagons and crossover vehicles. And even vehicular wallflowers like the Nissan Sentra and Dodge Neon economy cars are suddenly popular.

That shift in buying habits is expected to continue for the next couple of months, as gas prices remain high and consumers retrench after a summer of blowout sales. There will still be some spectacular deals. With buyers abandoning big, gas-guzzling utilities, for example-sales of the biggest SUVs, like the Chevy Suburban and Toyota Sequoia, plunged 52 percent in September-dealers are cutting as much as $10,000 off sticker prices. But that doesn't necessarily make big discounts a bargain. Some rules for buyers in today's careening market:

  • Consider resale values. If you plan to own a car for three years or fewer, beware of deep discounts like those being offered on large SUVs-they're guaranteed to show up again in the form of low trade-in values. "But if you drive a car till the wheels drop off, large SUVs are a great value right now," advises Jesse Toprak, lead industry analyst for car-shopping website Families considering a deeply discounted vehicle might think about one that can be handed down to the kids in a few years instead of traded back to the dealer.
  • Eyeball your vehicle's trade-in value. It's a lousy time to be trading in a large SUV-with demand drying up, dealers don't want them. But instead of refusing a deal, dealers may try to disguise a low-ball trade-in offer with a lower financing rate or some other come-on. So break out the trade-in value and make sure you know what you're getting for your old car, even if it means arranging third-party financing from a bank or online lender. If the trade-in value seems too low, try selling the car yourself.
  • Buy now, if you want a good economy car or an all-wheel-drive vehicle for winter. Incentives on small, gas-sipping cars like the Chevrolet Cobalt or the Toyota Corolla have been declining and will probably keep falling if current trends continue, which most analysts expect. Sales of all-wheel-drive vehicles always peak in December-which means that's when prices are highest. Conversely, if you're having trouble unloading a four-wheel-drive SUV, you might have better luck after the first snowfall.
  • Wait a couple of months, if you want a rock-bottom deal on a big SUV, especially GM products like the Suburban or the GMC Envoy. GM has a new lineup of big SUVs coming out next year, and "incentives on the current models will only go higher," predicts Toprak. Be prepared to make trade-offs, though-with inventory dwindling, you may not get all the options or features you want.
  • Don't let deals dominate your decision. The cars that hold their value the best are usually the cars with the smallest discounts. Kelley Blue Book, for instance, has identified the '06 Honda Accord as the sedan with the highest resale value-and it typically sells for within a few hundred dollars of the list price. Instead of hunting for deals, "buy the car that you want to buy," advises Carlos Ghosn, CEO of Nissan. "This is a buyer's market these days. You can have it both ways: Get the car you want and get a good value."